Sun Microsystems' Rise And Fall

Historians of companies, just like historians of countries, tend to have one of two dispositions. They can take the "Great Man" approach, emphasizing decisive leaders and bold actions, or they can see companies as operating in a river of history, carried along by currents over which they have little control.

No matter how IBM's
rumored acquisition of
Sun Microsystems
plays out, Sun's story is another indication of the shortcomings of the Great Man theory--not to mention a reminder to business people everywhere that sometimes, when they think they are being clever, they are really just being lucky.

During its heyday, the Internet bubble of 1998 through 2000, Sun was known for its personalities almost as much as its products. Scott McNealy was unavoidable for comment in the business press; he even made it to 60 Minutes on account of a sharp hockey stick and sharper tongue.

Programmer Bill Joy, through deft marketing on Sun's part, emerged in the role of the "Internet-era Edison," even though he didn't personally do a fraction of the things he was credited with. Anonymous Sun engineers were the ones staying up late, banging out code.

No criticism is implied of either men; both did their jobs admirably and served their shareholders well.

The real Sun story, though, involving both its rise and its fall, was playing out in the background, sometimes in spite of what anyone at the company might have been doing.

The first half of Sun's history, its upward arc, began in a confluence of events in the mid-1980s. The federal government was a great patron of computer research at elite universities, Stanford and UC Berkeley among them. A powerful operating system, Unix, became an academic product, and thus widely available at low or no cost, the way Linux would be 15 years later. And Moore's Law had already churned away long enough that even "commodity" processors from
Motorola
were powerful enough to handle a program with the girth of Unix.

These were the essentially off-the-shelf parts that early Sun engineers bolted together to make its first products. They were successes right away in technical marketplaces, with engineers and scientists. Sun's early success came at the expense of Digital Equipment Corp., which itself had gone up, then down, on the strength of the technology trends of an earlier generation.

So deftly did Sun take advantage of technology that during the '90s, it was impossible to beat it; companies like IBM feared Sun the way companies now fear
Microsoft
and
Google
. Anyone who wanted to do serious technical computing bought Sun because its machines were essentially the only option.

The problem for Sun is that the forces that launched it didn't stop once Sun was a success. Creating complex operating systems--something that had once been such cutting-edge engineering you needed the old Bell Labs to do it--became a more straightforward engineering undertaking. With NT, Microsoft took its first big step toward a mature OS; later versions of Windows closed the gap with Unix, as far as much of the marketplace was concerned.

And Moore's Law was not repealed. Low-end
Intel
chips had been a joke during Sun's early years; by the end of the 1990s, they had caught up with the proprietary chips that Sun had by then incorporated into its machines. The economics of increasing returns, which holds that successful companies tend to grab an ever-larger share of the marketplace, gave another boost to Intel.

Sun's slogan during the late 1990s was, "We're the dot in dot-com." It was true; anyone with a serious Web site chose Sun, though the fact that everyone was awash in VC money made buying the expensive machines an easier call than it might have been otherwise. But if the dot-com bubble had happened just a few years later, Sun would never have had its thermonuclear moment--the stock was near $250 in 2000--because the competition, especially Intel and Microsoft, would have by then caught up. With the rise of Linux--software that arguably was the inevitable result of the Internet--Sun didn't have many plays left.

All of which may be a long way of saying that it's more important to pay attention to how the winds are blowing than to whatever a sailboat's captain is doing with the tiller. It definitely takes skill to take proper advantage of your environment. But heaven help when the fates turn against you.